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TMI Blog2024 (12) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... endation of Ld. TPO which was further approved by Ld. DRP instead of the rate at which Chhattisgarh State Power Distribution Company Ltd. supplies the power to its consumers. The view of Hon ble Jurisdictional High Court was subsequently affirmed by the Apex Court in the case of CIT Vs. Jindal Steel and Power Ltd. [ 2023 (12) TMI 417 - SUPREME COURT ] as held the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. Thus ground no. 1 of the assessee s present appeal is allowed. Disallowance of deduction u/s 80G and double disallowance of deduction u/s 80G - allowability of expenditure incurred for donation out of the amount designated for CSR expenses which were disallowed by the assessee as per provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pannel (DRP). The objections of the assessee, after affording opportunities of being heard were disposed of by the Ld. DRP vide their order u/s 144C(5) of the Act on 30.12.2023. The directions accorded by the Ld. DRP have been incorporated by the Ld. AO in the impugned order, making certain disallowances. Being dissatisfied with such additions the assessee has filed the present appeal. 2. The grounds of appeal raised by the assessee are as under: A. Ground No. 1 Disallowance of deduction under sec 80-IA of the Act on account of downward adjustment in arm's length price for transfer of power from captive power unit ('eligible unit') to stee manufacturing unit ('non-eligible unit') [ INR 17,15,69,527/-1] 1.0 That on the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer ('Ld. TPO') / AO / Hon'ble Dispute Resolution Panel ('DRP') erred in reducing claim for deduction under sec 80-IA of the Act by INR 17,15,69,527/- considering arm's length price (ALP) for transfer of power from eligible unit to non-eligible unit at the rate at which power generating company supplies power to power distribution company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Ld. AO erred in computing interest under section 244A of the Act for a period of 15 months instead of 46 months (i.e. April 2020 to January 2024) without adducing any reasons for the same. F. Ground No. 6 Difference in total income as per assessment order computation sheet. 6.0 That on the facts and in the circumstances of the case and in law and without prejudice to preceding ground, the Ld. AO erred in computing tax on total income of INR 8,52,84,930/- instead of total income of INR 8,52,70,750/- computed in the assessment order. G. Ground No. 7: Initiation of penalty proceedings under sec 271AA Sec 270A of the Act 7.0 That on the facts and in the circumstances of the case and in law, Ld. AO erred in initiating penalty proceedings under sec 27 IAA 270A of the Act. H. Ground No. 8 - General 8.0 That on the facts and circumstances of the case and in law, draft assessment order under section 144C(1) of the Act dated 31-03-2023, final assessment order under section 143(3) r.w.s. 144C(13) of the Act date 29- 01-2024 and the directions issued by Hon'ble DRP under section 144C(5) of the Act dated 30-12-2023 are without jurisdiction, invalid, bad in law and are liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the stipulated time. After due consideration to the objections raised by the assessee, the DRP has passed an order u/s 144C(5) of the Act on 30.12.2023, wherein the view taken by the Ld. TPO was approved and the Ld. AO was directed to give effect of the downward adjustment by bringing down the deduction claimed u/s 80IA as per the downward adjustments proposed by the Ld. TPO. 6. Another observations of the Ld. AO was pertaining to claim of deduction by the assessee u/s 80G of the Act for Rs. 4 lacs (Being 50% of Rs. 8 lac). It is noticed by the Ld. AO that the assessee has added back the amount of CSR and donation of Rs. 24,30,309/-, and has further claimed deduction u/s 80G of Rs. 4.00 lacs, which was spend out of the said CSR expense. A show cause in this respect issued to the assessee to furnish its explanation, in response a detailed submission was furnished by the assessee but the same was rejected and an addition of Rs. 4.00 lac was made. 7. Aggrieved by the aforesaid additions, assessee preferred an appeal before us, against the order of Ld. AO framed u/s 143(3) r.w.s. 144C(13) of the Act dated 29.01.2024. 8. Ground wise discussion, delegation and adjudication to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire deduction under sec 80-IA of the Act as income and also disallowed its claim for deduction u/s. 801A of the Act. The assessee filed an objection before the Dispute Resolution Panel (DRP) which vide its order dated 30-12- 2023 upheld the contentions of the TPO / AO. 1.6 Basis the directions of the DRP, the AO passed the final assessment order dated 29-01-2024 computing the total income under normal provisions at INR 8,52,70,750/-. Being aggrieved with the aforesaid order, the assessee filed before the Raipur Bench of the Hon'ble ITAT. 2.0 Case laws in favour of the assessee on the aforesaid issue Case Laws Related to Assessment Year Decision DCIT -vs.- Mahendra Sponge and Power (P.) Ltd. [20241 159 taxmann.com 147 (Raipur - Trib.) [Refer Page Nos. 4-13] ITA No.197/RPR(2017 dated 29-072022 . [Refer Page Nos. 24-291 ITA No.196/RPR/2019 dated 05-08-2022 . [Refer Page Nos. 30-51] 2015-16 2013-14 2014-15 market value of power supplied by assessee to its steel division shall be computed by considering rate at which power is available in open market, namely, price that is charged by electricity board and it should not be compared with rate of power when it was sold to a suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of Apex Court in the Jindal Steel Power Limited (supra) and held that power tariff maintained by WBSEB for selling of power to its consumers shall be the arm's length price for transfer of power from eligible unit to non-eligible unit. The said decision clearly shows that the decision of Supreme Court in the case of Jindal Steel Power Limited (supra) even applies to cases post introduction of provisions of specified domestic transaction in case of transfer price of power. Nectar Lifesciences Ltd -vs.-ACIT [2022] 138 taxmann.com 557 (Delhi- Trib.) [Refer Page Nos. 151 - 1621 2013-14 Market rate on which any industrial undertaking or consumer would be getting electricity should be applied as CUP for benchmarking transaction of sale of electricity. 2.1 In addition to above, there are multiple decisions of Tribunals (including Kolkata, Delhi, Mumbai, Ahmedabad, Hyderabad etc) for the period post the introduction of specified domestic transaction wherein it has been held that arms-length price of power should be the market rate at which the State Electricity Board supplied power to the industrial consumers in the open market. Few of the decisions have been summarise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-09, ITA No. 197/RPR/2017 dated 29-7-2022 for A.Y. 2013-14 and ITA No. 196/RPR/2019 dated 5- 8-2022 for A.Y. 2014-15 as well as the by the judgment of the Hon'ble High Court of Chhattisgarh in the case of Godawari Power and [spat Ltd (supra). We find that the Tribunal vide its order passed in the case of Mahendra Sponge Power Ltd. (Supra) had after exhaustive deliberations vacated the disallowance of the assessee l s claim for deduction u/s 801A(4)(iv)(a) of the Act, observing as under: 6. We shall first deal with the grievance of the department that the CIT(Appeals) had gravel) erred in law and facts of the case in vacating the disallowance of the assessee's claim for deduction u/s. 801A(4)(iv)(a) of the Act amounting to Rs. 3,86,20,902/-. 7. Controversy involved qua the issue in hand lies in a narrow compass, i.e., sustainability of the triggering of Section 801A(8) of the Act by the A.O for declining the assessee s claim of deduction u/s. of Rs. 3,86,20,902/-. 8. Shorn of unnecessary details, the assessee company which is engaged in the business manufacturing and trading of sponge iron, steel ingots and generation of power has two divisions, viz (1) steel division; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee that the issue involved in the present appeal is squarely covered by the order passed by the Tribunal in its own case for the immediately preceding assessment year 201314 in ITA No. 197/RPR/2017, dated 29-7-2022, wherein, the declining by the AO of the assessee l s claim u/s. 801A(4)(iv) on identical facts had been restored by the Tribunal. 11. The Ld. Departmental Representative (for short 'DR') fairly conceded to the submissions put forth by the Ld. AR. 12. Ostensibly, as stated by the Ld. AR, and rightly so, the aforesaid issue in hand is squarely covered by the order that was passed by the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e, assessment year 2013-14, wherein the Tribunal after relying on its earlier order had observed as under: 10. Controversy involved qua the issue in hand lies in a narrow compass, i.e., as to whether or not the A.O had rightly triggered the provisions of Section 801A(8) of the Act by adopting the domestic purchase price of electricity by CSEB as the market rate and justifiably scaled down the assessee's claim for deduction u/s. 801A(4)(iv)(a) by an amount of Rs. 4,38,75,880/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l-Division had to pay to the Board if the power was purchased from the Board. 31. The market value of the power supplied to the Steel-Division should not be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. 33. It is admitted by the Department that in Chhattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power. 34. The CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to (c) raised by the Revenue are dismissed in terms of our aforesaid observations. We, thus, respectfully following the view taken by the Tribunal in the assessee's own case as culled out hereinabove, finding no merit in the declining of the assessee's claim for deduction u/s. 80IA(4)(iv)(a) of Rs. 3,86,20,992/- by the A.O. during the year under consideration, which had rightly been vacated by the CIT(Appeals), uphold the latter s order. Thus, the Grounds of appeal No(s). 1 2 raised by the Revenue are dismissed in terms of our aforesaid observations. 9.3 In view of aforesaid observations, since the issue is duly deliberated upon by the Hon ble Jurisdictional High Court of Chhattisgarh in the case of CIT v Godavari Power Ispat Ltd. (supra), wherein Hon ble Court has decided that the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier; it should have been compared with the market value of power supplied to a consumer . Whereas, in the present case, against the binding judgment of the Hon'ble High Court, the Arm s Length Price (ALP) adopted for transfer of power from eligible unit to non-eligible unit at the rate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract. This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition. 29. Section 43A of the 1948 Act lays down the terms and conditions for determining the tariff for supply of electricity. The said provision makes it clear that tariff is determined on the basis of various par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the impugned order of Ld. AO on the aforesaid issue, which is squarely covered by the aforesaid decisions (supra). Therefore, in absence of any distinguishing facts or features which could have been brought on record by the revenue, having identical issue, respectfully following the principle of law laid down by Hon ble High Apex Court and Hon ble Jurisdictional High Court, ground no. 1 of the assessee s present appeal is allowed. 10. Ground no. 2 3: Disallowance of deduction u/s 80G of the Act and double disallowance of deduction u/s 80G of the Act . 10.1 Apropos, ground no. 2 3 of the appeal regarding disallowance u/s 80G and double disallowance of the same amount, Ld. AR have furnished a written submission, the same is extracted as under: B. Ground No. 2 - Disallowance of deduction under sec 80G of the Act [INR 1.0 Facts of the case 1.1 The assessee has incurred aggregate corporate social responsibility (CSR) expenditure and donations of INR and charged the same to the Profit loss Account. The entire CSR expenditure of INR 24,30,309/- has been disallow( in the computation of total income under sec 37 of the Act. 1.2 The said amount includes donation of INR [Shree Marwari Paths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax reported in (2023) 156 Taxmann.com 575 (Hyd. Trib) dated 31.08.2023, wherein the observations of the tribunal are as under: 8. We have gone through the record in the light of the submissions made on either side. Insofar as the payments made to the PM Relief Fund and to the institutions enumerated by the learned AR are concerned, it is a matter of verification. Learned Assessing Officer disallowed such a deduction not on the ground of non-payments, but because the assessee claimed such spending incompliance with their legal obligation under section 135 of the Companies Act. According to the learned Assessing Officer, by showing such an amount as spending incompliance with section 135 of the Companies Act, the assessee had the benefit of compliance with such a provision and, therefore, the matter ends there insofar as such payments are concerned. Except the business expenditure covered by section 30 to 36 of the Act as stipulated under section 37(1) of the Act, no other expenditure is allowable and this position is made amply clear by insertion of Explanation-2 to section 37(1) of the Act. It says that any expenditure incurred towards the activities relating to CSR, shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in respect of two entries are restricted if such payments were towards the discharge of the CSR. The Legislature could have put a similar embargo in respect of the other entries also, but such a restriction is conspicuously absent for other entries. The irresistible conclusion that would flow from it is that it is not the legislative intention to bar the payments covered by section 80G(2) of the Act which were made pursuant to the CSR, and other than covered by section 80G(2)(iiihk) and (iiihl) of the Act. As stated above, clue can be had from the restrictions by way of section 80G(2)(iiihk) and (iiihl) of the Act. 13. This aspect has been dealt with by successive Co-ordinate Benches in the cases relied upon by the assessee. While elaborately discussing this issue in the case of JMS Mining (P.) Ltd. (supra), the Kolkata Bench of the Tribunal discussed this issue in the following manner: 22. From a bare reading of the section 80G of the Act we note that deduction under this section has to be made in accordance with and subject to the provisions of this section i.e. section 80G of the Act. As per this section i.e. section 80G of the Act, an amount equal to fifty percent (50%) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... triction or any restriction like in the case of donation to Swach Bharat Kosh Clean Ganga Fund. So the assertion of Ld. PCIT that AO could not have allowed deduction u/s 80G of the Act to an assessee on the CSR expenditure/donation to an institution u/s 80G(2)(a)(iv) which is enjoying certificate 80G(5)(vi) of the Act, is erroneous and therefore cannot be accepted. For this, we rely on the interpretation maxim Expression Unius Esl Exclusio Alterius which is a Latin phrase that means express mention of one thing excludes all others. This is one of the rules used in interpretation of Statutes. The phrase indicates that items not on the list are assumed not to be covered by the Statute. When something is mentioned expressly in a Statute, it leads to the presumption that the things not mentioned are excluded. This is an aid to the construction of Statutes. Applying the legal maxim 'expressio unius est exclusio alterius', it can be safely inferred that when the Legislature in particular has provided for only the above referred two specific exceptions in Section 80G, then it is the implied intent of the Legislature to permit deduction u/s 80G in respect of CSR contributions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d percent of the donation of Rs. 1 crores paid to Prime Minister's National Relief Fund u/s 80G(2)(iiia) read with Section 80G(1)(i) of the Act. The company claim deduction to the extent of fifty percent of the donation of Rs. 1 crores paid to any other registered charitable trust u/s 80G(2)(iv) read with Section 80G(1)(ii) of the Act. 23. As discussed supra, we concur with the contention of the assessee that since Parliament intended certain restrictions to only CSR expenditure in respect of two donations included by an assessee as CSR expenditure i.e. [Swachh Bharat Kosh and Clean Ganga Fund] has impliedly not made any prohibition/restriction in respect of claim of CSR expenses in other cases if it is otherwise eligible under Section 80G of the Act. In this context we find that the assessee has made donation of Rs. 1.25 crores on 20.01.2016 by RTGS dated 19.01.2016 through UCO Bank which is evident from page 18 of PB which is received by Shree Charity Trust which was 80G(5)(vi) certificate of the Department dated 15.01.2009 placed at page 17 of PB. The assessee has also made payment of Rs. 10 Lakhs to Pt. Jashraj Music Academy Trust which is found placed at page 22 23 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction u/s 80G of the Act. For the sake of clarity and interpretation, sub clause (iiihk) and (iiihl) of sub section 2 of Section 80G is reproduced as under: 80G(2) (iiihk) [the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013, (18 of 2013); or [Inserted by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.] (iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub- section (5) of section 135 of the Companies Act, 2013, (18 of 2013); 10.5 In terms of aforesaid observations, as in the present case admittedly the donations extended by the assessee are to Shri Marwadi Pathshala Samiti (Bitti Committee) of Rs. 7,50,000/- and Rajashthan Gokalyan of Rs. 50,000/- as discernible from para 15 of the assessment order and such parties does not fall under the exception carved out u/s 80G(2)(iiihk) and (iiihl), thus, the assessee is entitled for claim of donations paid under the provisi ..... 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